The Manila Water Concession: A Key Government Official's Diary of the World's Largest Water Privatization
In January 1997 the Government of the Philippines awarded two long-term concession contracts, handing over to private consortia the responsibility to operate and expand water and wastewater services in Greater Manila. With a combined population of 11 million in the two service areas and investment needs projected at $7 billion over the contract period, the transaction was hailed as the largest water concession in the world. By tendering the contract competitively, the government was able to deliver an immediate benefit to customers: the winning bidders not only accepted contractual obligations to expand service coverage much faster than in the past, they also offered large rebates on the tariffs of the incumbent public utility.Mark Dumol was a key player in the Government team which steered the Manila transaction. In this book, he tells the story: how the idea of a concession emerged and gained support, how the preparation effort was designed and launched, how they surmounted the main hurdles and, how some of the key contract features were thought out. Overseeing a water concession of this size is a challenging process, which involves complex preparation work and extensive stakeholder consultation, and can be derailed easily by procedure or politics. Often like in Manila the government officials involved in preparing a concession have to learn by doing, as few countries have relevant prior experience.Mr. Dumol's objective in donating his time to write this book is to better prepare fellow government officials, who face similar challenges in other countries, for some of the issues they will have to address.
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Page 42 - A similar strategy is reported on, and recommended to other governments, by Mark Dumol, a Filipino government official, in a World Bank publication on the Manila water concession. Dumol writes, in a chapter entitled "Need to have bids lower than the existing water tariff" that: "In August 1996, about five months before the bid submission, the water tariffs were increased by about 38 per cent. This tariff increase was actually long overdue and would have been implemented regardless of privatization.....
Page 13 - Aires, they had committed to invest $4 billion, which was supposed to be the largest investment in a privatized water system ever. Actually, this was the first time we had heard the name of Lyonnaise des Eaux, and we did have some initial apprehensions on the competence of any French firm that was not in the business of fashion or wine. The information we received was impressive. We got the impression that water privatization was commonplace. We did not immediately realize that there were few actual...
Page 57 - Agreement actually had a deep meaning behind them. We decided to create a "how-to" manual for the Regulatory Office. With the help of our consultants, we created a manual that taught the regulators in detail nearly all that they had to do. The manual was probably four times the size of the Concession Agreement, but it was structured neatly and things were explained in great detail.
Page 12 - Aires at the time of the privatization of the city's water system and he was able to share a substantial amount of information about this transaction. I was encouraged by the parallelism between Manila and Buenos Aires, particularly in terms of size, coverage, and inefficiency.
Page 107 - MWSS may, for instance, now be used to expand the pro-poor programs of the Department of Health and the Department of Social Welfare and Development.
Page 5 - MWSS was supplying water to only two-thirds of its coverage population for an average of only 16 hours per day.
Page 57 - We recognized that the Regulatory Office would play an important role in making the concession work. Yet, we would have to create this office from scratch. One of the most difficult things for the regulator was to interpret the Concession Agreement, an extremely dense document.
Page vii - With a combined population of 11 million in the two service areas and investment needs projected at $7 billion over the contract period, the transaction was hailed as the largest water concession in the world.
Page 13 - Macao, they had reduced non-revenue water from 44 percent to 14 percent in four years' time. In Buenos Aires, they had committed to invest $4 billion, which was supposed to be the largest investment in a privatized water system ever.